The following is testimony by Under Secretary of State for Political Affairs Wendy Sherman before the Senate Banking on October 13, 2011:
Chairman Johnson, Ranking Member Senator Shelby, Distinguished Members of
the Committee: thank you for inviting me to appear before you today to
discuss the Obama Administration's strategy to address the continued threat
posed by the Iranian regime's nuclear ambitions, its support for international
terrorism, its destabilizing activities in the region, and its human rights
abuses at home.
The world today is unified to an unprecedented degree in its concern that a
nuclear-armed Iran would undermine the stability of the Gulf region, the
broader Middle East, and the global economy. In defiance of U.N. Security
Council and IAEA Board of Governors resolutions, Iran has continued to expand
its sensitive nuclear activities, and refuses to cooperate with the IAEA,
raising strong, legitimate concerns about the purpose of the nuclear
program. Beyond the nuclear issue, Iran continues its longstanding support to
terrorist organizations such as Hizballah, Hamas, and Palestine Islamic Jihad
(PIJ), as well as by its support to newer proxy militia groups in Iraq.
But, these efforts belie a regime that is actually far more vulnerable and
weakened than it would like to project. 2011 has been a harsh wake-up for
the Islamic Republic of Iran. Iran's government has failed in its efforts to
co-opt uprisings in the Arab world and claim its 1979 revolution as
inspiration. No popular movement in the region has looked to Iran as a model for
change; the only entity that turned to Iran was another autocratic regime
in Syria trying desperately to hang on to power. Iran has further undermined
its standing among Muslims and further strained its bilateral relations in
the region by helping the failing regime of Bashar al-Asad to brutally
crack down against Syrian citizens. Misreading the stark warning message from
the Arab Awakening, Iran's government continues to arrest, imprison, and
persecute Iranians who dare to ask for accountability and transparency from
their government, as well as just and fair treatment for ethnic and
religious minorities.
To address the multifaceted challenges posed by Iran's regime, its
flouting of its nuclear obligations, its nuclear weapons ambitions, its support
for terrorism, its destabilizing activities in the region, and its human
rights abuses at home, the U.S. has led a sustained and broad international
campaign to exact steep costs for the regime and to complicate its ability
to pursue these policies. Iran today faces tough economic sanctions and
broad diplomatic pressure, and though it aspires to regional and even global
leadership, its current policies have made it an outcast among nations.
American policy regarding Iran remains unambiguous. First and foremost, we
must prevent Iran from acquiring nuclear weapons. Its illicit nuclear
activity is one of the greatest global concerns we face, and we will continue to
increase the pressure until the Iranian regime engages the international
community with seriousness and sincerity and resolves its concerns. But
pressure is not an end unto itself. It may provide the impetus to Iranian
action, but does not prescribe the measures that are necessary to build
international confidence in Iranian nuclear intent. To that end, we have offered to
meet with Iran and have proposed confidence-building and transparency
arrangements that offered practical incentives. Unfortunately, Iran has failed
time and again to reciprocate and to take advantage of these opportunities.
As a consequence, more than ever, world pressure is mounting on Iran. Last
year, the United States led a successful effort in the UN Security Council
to adopt Resolution 1929, which led to the toughest multilateral sanctions
regime Iran has ever faced. The resolution strengthened previous UN
resolutions and provided a platform upon which the European Union, Norway,
Australia, Canada, South Korea, Switzerland, and Japan implemented strict
domestic measures to bolster the measures of UNSCR 1929.
The efforts made by the Congress, by all of you, have also effectively
sharpened American sanctions, particularly against Iran's energy sector and the
regime's human rights abuses. When President Obama signed into law the
Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA,
which amended the Iran Sanctions Act of 1996) in early July, 2010, the
Administration and the Congress sent an unmistakable signal of American resolve and
purpose, expanding significantly the scope of our domestic sanctions and
maximizing the impact of new multilateral measures. Since then, the
Administration has imposed sanctions on a growing list of individuals and entities
responsible for Iran's expanding scope of unauthorized activities, and
these sanctions are raising the cost, time, and energy required for Iran to
pursue its current policies.
In September 2010, Secretary Clinton imposed the first sanctions any
administration had ever imposed under the Iran Sanctions Act. To date, the State
Department has sanctioned 10 foreign companies for doing business with Iran's energy sector. Further, CISADA's special rule has worked exactly as
intended: it gave us the flexibility and leverage to persuade multinational
energy firms Shell, Statoil, ENI, Total and INPEX to withdraw from all
significant activity in Iran. The companies also provided clear assurances that
they would not undertake any sanctionable activities in Iran's energy
sector in the future, and in doing so, forfeited billions of dollars of
investments. In addition, Repsol abandoned negotiations over several phases of the
South Pars gas field.
Other successes under CISADA include the fact that major energy traders
like Russia's Lukoil, India's Reliance, Switzerlands Vitol, Glencore, and
Trafigura, Kuwait's Independent Petroleum Group (IPG), Turkey's Tupras,
France's Total, and Royal Dutch Shell have stopped sales of refined petroleum
products to Iran. Iran has had to redirect production facilities from
valuable petrochemical export production in order to manufacture refined
petroleum for domestic sale. Furthermore, Reliance, India's largest private
refiner, announced in 2010 it would not import Iranian crude.
Investment in Iran's upstream oil and gas sector has dropped dramatically,
forcing Iran to abandon liquefied natural gas projects for lack of foreign
investment and technical expertise, after Germany's Linde, the only
supplier of gas liquefaction technology to Iran, stopped all business with it.
South Korea's GS Engineering and Construction cancelled a $1.2 billion gas
processing project in Iran. Outside of Iran, British Petroleum chose to shut
down production from a North Sea platform co-owned with the Iranian Oil
Company, to ensure compliance with EU sanctions. Trans-Adriatic Pipeline (TAP)
partners announced that the pipeline, once constructed, would not be used
to transport gas from Iran.
Iran's national airline, Iran Air, is also paying the price for having its
aircraft misused for proliferation purposes, and providing services to the
IRGC. Most major fuel providers have terminated some or all of their Iran
Air contracts, including British Petroleum, Royal Dutch Shell, Total, OMV,
and Q8. Iran Air is finding it difficult to find sources to replace these
suppliers, not to mention places to land.
Iran is increasingly isolated from the international financial system, as
Under Secretary of Treasury Cohen's testimony describes in detail. Virtually
all of the world's first-tier banks have concluded that the Iranian market
is not worth the reputational risk posed by deceptive Iranian practices.
They understand the consequences of both willfully and inadvertently
facilitating an illicit transaction, and have severely curtailed their
interactions with Iranian banks. The Administration is looking very closely at further
measures that will drive home the message that any bank doing business
with banks that do business with terrorists puts its own reputation at risk of
international sanction and condemnation.
Iran's shipping is also under international pressure. Large shipping
companies such as Hong Kong-based NYK are withdrawing from the Iranian market,
and reputable insurers and reinsurers such as Lloyd's of London, no longer
insure Iranian shipping. Iran's shipping line IRISL, has been exposed for its
complicity in the shipment of goods in violation of Security Council
resolutions, as noted by the UN's Iran Sanctions Committee. IRISL has been
sanctioned by the United States, the EU, Japan, South Korea, and others.
Difficulty in repaying loans and maintaining insurance coverage has led to the
detention of at least seven IRISL ships. Major shipbuilding companies are
refusing to build ships for IRISL. As a direct result of the international
pressure we helped build, IRISL ships have a harder time finding ports of call,
particularly in Europe.
Other major companies have voluntarily opted out of the Iranian market,
including automotive firms Daimler (German), Toyota (Japanese), and Kia (South
Korea), as well as Germany's ThyssenKrupp. Caterpillar prohibited its
non-U.S. subsidiaries from exporting to Iran. Switzerland's ABB Ltd.,
Ingersoll-Rand Plc, and Huntsman Corp. have ended business with Iran.
The result of our strategy is an Iran that is isolated economically and
finding dwindling options for doing business internationally. But,
importantly, Iran is facing these problems because of targeted sanctions and the
voluntary decision by international firms to exit the Iranian market. Our
sanctions approach continues to seek to undermine Iran's ability to engage in
illicit conduct, with measures against Iran's energy sector removing an
invaluable source of funding that Iran could apply to that conduct. In spite of
the high price of Iranian crude on world markets, Irans aggregate economy
also seems to be weakening. These effects will increase as sanctions
implementation continues to improve, especially if the recent decline in the price
of crude oil continues.
These efforts are directed toward achieving our goals of persuading Iran to
comply with its international obligations to prove the exclusively
peaceful nature of its nuclear program and to engage constructively with the P5+1.
On September 21, I participated in a meeting of the P5+1 countries in New
York, where we and our partners, including Russia and China, reiterated
longstanding and grave concerns about Irans installation of centrifuges at
the formerly-covert enrichment plant at Qom, about its stepped up production
of 20% enriched uranium, and about the possible military dimension of Iran'
s program (a concern notably shared by the IAEA). We also reconfirmed the
dual-track strategy of engagement and pressure. It was a strong and unified
statement. It concluded that the P5+1 would be willing to hold another
meeting with Iran, but only if Iran is prepared to engage more seriously in
concrete discussions aimed at resolving international concerns about its
nuclear program. If, however, Iran simply seeks to buy time to make further
progress in its nuclear program, it will face ever-stronger pressures and
ever-increasing international isolation.
We will continue to work with Congress as we implement both tracks of the
dual-track policy. We believe that, in the short term, further improvements
in international implementation, based on our current authorities, offer
the best way to increase pressure on Iran. As Congress considers additional
authorities, we would like to work with you to ensure that any additional
steps we take will strengthen the international consensus and global pressure
against Irans nuclear program. The most effective sanctions are those
taken by a large portion of the international community, which requires close
coordination with friends and allies, as well as a targeted approach.
Convincing them to take action will require us to carefully calibrate our
outreach to the individual circumstances of specific countries and sectors. It
will also require flexibility to find creative and proactive tools to
convince Iran that it cannot continue to pursue its nuclear ambitions.
Sanctions are doing more than raising the cost of continuing illicit
nuclear activity; they are finally shining a spotlight on some of the
individuals and entities perpetrating egregious human rights abuses against Iranian
citizens. Using CISADA, we have designated 11 individuals and three entities
for human rights violations, and we continue to compile more information
and evidence that will allow us to identify more murderers, torturers, and
religious persecutors. We have taken a firm stand on the Iranian regime's
violations of human rights, including the repression of religious minorities
as exemplified by the death sentence that might have been imposed on Pastor
Youcef Nadarkhani simply for following his own chosen religion had it not
been for the immediate condemnation from world leaders, religious groups,
and NGOs. At the same time, we are offering capacity-building training
programs, media access, and exchanges to help Iranian civil society strengthen
their calls for accountability, transparency, and rule of law. The Iranian
opposition's desire to operate without financial or other support from the
United States is clear. We are committed to using available and effective
diplomatic tools to assist those who want our assistance in speaking out and
defending fundamental rights and freedoms. The United States will always
support the Iranian people's efforts to stop government-sanctioned harassment,
detention, torture, imprisonment, and execution of anyone who dares
express ideological, religious, or political differences from the regime's
repressive, totalitarian vision.
We engage regularly with like-minded countries to develop shared approaches
to increase the pressure for a change in the Iranian government's
behavior. In July, the United States and United Kingdom, with the support of
Canada, imposed visa restrictions on Iranian government officials and other
individuals who were responsible for or participated in human rights abuses,
including government ministers, military and law enforcement officers, and
judiciary and prison officials. We welcome the European Union's announcement
this week of more than two dozen additional travel bans. There is absolutely
no cause for allowing petty tyrants to trot around the globe while
suffering and repression continues unabated inside Iran. International pressure
and condemnation on this point is growing: We worked with Canada to pass a UN
General Assembly resolution last year condemning Iran's human rights
abuses. This condemnation attracted a larger margin than any similar resolution
in the past eight years. It may seem small, but every pro-regime vote we
strip away on resolutions like this is one fewer fig leaf for the Iranian
regime to hide behind as they murder and torture their own people, and we will
continue to press measures large and small at every opportunity.
We were leaders in an effort in the UN Human Rights Council in March to
create a Special Rapporteur on Iran, the first country-specific human rights
rapporteur since the Council's creation. Special Rapporteur Ahmed Shaheed, a
former foreign minister of the Maldives and respected human rights
advocate, will serve as an independent and credible voice to highlight human
rights violations by the government of Iran. All of these multilateral efforts
reinforce our strong domestic actions that prove that Iran's attempts to
undermine universal rights and deceive the world only further isolate it from
the global community.
In my new role as Under Secretary for Political Affairs, I look forward to
working closely and transparently with members of Congress to prevent Iran
from acquiring nuclear weapons, curtail its support for terrorism, make it
more difficult for Iran to interfere in the region, and deter the regime
from committing human rights abuses against its own people.